Incomes of Leading Chinese Manufacturers of Chip Equipment Demonstrate Growth

According to the results of the first half of 2023, the revenue growth of the leading Chinese manufacturers of chip equipment was recorded.

Incomes of Leading Chinese Manufacturers of Chip Equipment Demonstrate Growth

The relevant information is contained in a study by the Shanghai company CINNO Research, which was published last Thursday, September 28. According to this firm, the total revenue of the 10 largest Chinese manufacturers of chip equipment in the first half of the year reached about 16.2 billion yuan ($2.2 billion). This indicator is 39% higher than the level of commercial efficiency that was recorded for the same period last year.

This financial result, according to experts, is material evidence of Beijing’s actions to ensure a kind of technological sovereignty in the semiconductor industry. The revenue growth of Chinese companies demonstrates the success of the country’s respective efforts. This aspiration is especially important in the context of geopolitical tensions between Beijing and Washington. The unfavorable state of affairs in the international arena has already led to the fact that the United States has restricted the access of Chinese companies to advanced chips. Washington has also narrowed the scope of opportunities for American technology firms to develop activities in the Asian country. Beijing has retaliated by restricting exports of gallium and germanium, minerals needed in the production of chips.

Semiconductors are currently used in many developments, for example, in smartphones, and they are also components of satellites. This material has become, in a symbolic sense, a kind of battlefield within the framework of the technological confrontation between Beijing and Washington.

The United States authorities, as part of the implementation of export restrictions tactics, seek to restrict China’s access to the most important semiconductor equipment and technologies. The supply chain of microcircuits is characterized by a high level of complexity and is a process in which many companies are involved, including sellers of semiconductor design tools and manufacturers of products.

For a long period of time, Beijing has relied on international cooperation within the technology industry. The Chinese semiconductor sector has remained behind South Korea, Taiwan, and the United States in terms of efficiency and productivity. At some point, Beijing had to be very active in this direction against the background of Washington’s actions. In 2019, the United States imposed sanctions on the Chinese company Huawei and the largest chip manufacturer from this Asian country SMIC. Washington’s decision, in a sense, was a turning point in the history of China’s technology industry. Beijing is currently striving to develop domestic industry, seeking to increase its autonomy. China is also gradually reducing the level of dependence on foreign companies.

Beijing’s actions to develop the domestic technology sector against the background of external restrictions have contributed to the growth of revenues of local companies specializing in the production of chip equipment.

CINNO Research reported that in terms of revenue, the largest Chinese manufacturer of semiconductor equipment is Naura Technology Group. This company produces tools that are used in the chip-making process. According to the results of the first half of 2023, the firm’s revenue increased by 68% year-on-year, amounting to more than 7 billion yuan ($959 million).

The second manufacturer in terms of revenue among Chinese companies of the designated functional orientation is Advanced Micro-Fabrication Equipment. This company produces machines. The firm’s products are used in the production of semiconductors. The revenue of this company in the first six months of this year showed an increase of 28% year-on-year. In the first half of the year, the firm earned 2.53 billion yuan ($346 million).

The third largest player is ACM Research. The company produces equipment for the cleaning and packaging of semiconductors. The firm’s revenue in the first six months of 2023 amounted to 1.61 billion yuan ($ 220 million), an increase of 47% year-on-year.

At the same time, experts note that China lacks access to the most advanced tools for chip production. For example, a Dutch company produces equipment for the manufacture of microcircuits, which is officially called a machine for extreme ultraviolet lithography. This is one of the most expensive tools for the production of modern chips. The Dutch government has banned the export of this equipment to China.

External restrictions and concerns about the deterioration of the situation in the international arena are a kind of motivation for Beijing, prompting the Chinese authorities to actively interact with local companies. At the same time, there are already signs of some success in the semiconductor industry of this country in the development of advanced chips. Achievements are recorded against the background of American sanctions. This month, Huawei released a new smartphone that can connect to next-generation 5G mobile networks. A chip was found in this device, which became evidence that the technological capabilities of the manufacturer exceeded the preliminary estimates of its forces.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.